Understanding is perhaps the biggest issue with annuities. Advisers and consumers alike are not taking time to understand the needs properly, and are racing off with a “Ready -Fire-Aim” approach that just gets people in trouble.
Often, people considering annuities are presented with too much information and analysis stemming from a limited view of the marketplace. Worse, they may have been subjected to uninformed sales pressure.
Rarely are they offered truly unbiased advice that is not afraid to say “You Don’t Need An Annuity,” or “That is a good product, but not the right one for you because of this reason…..”
People unfortunately don’t have a solid understanding of the market to make their own decisions.
Who is at fault?
Rarely are the carriers or annuity contracts to blame, because the insurance companies are heavily regulated in each state and subject to stringent underwriting rules.
Sadly, sales people are not often well informed about the products they offer either. They too lack understanding.
Is the consumer at fault? No.
In reality, there is no fault. There’s just a generally bad approach, stemming from misunderstanding.
The upshot is, consumers approach annuities from the wrong angle, and then get ‘sold’ something they don’t want, need, or worse, something wholly inappropriate for them. Carriers, regulators, and state insurance commissioners engage in a lot on hand wringing and pass yet more rules and restrictions on an otherwise stable marketplace… and all the while the solution is simple. (most good solutions are so…)
Consumers are approaching annuities without a basic fundamental understanding of the market, and without their own guiding principles and goals.
It’ not “Ready… Fire… Aim”. Instead we will tackle annuities with a pragmatic, “Ready…. Aim… then, Fire….”